Prep the pan. Line an 8x8-inch baking pan with parchment, leaving overhang on two sides to lift the fudge out later. Lightly grease the parchment.

Toast the coconut. Add 1 cup of the shredded coconut to a dry skillet over medium heat. Stir often until lightly golden and fragrant, 3–5 minutes. Remove from heat immediately to avoid burning. Set aside to cool. Reserve the remaining 1/2 cup coconut for topping.

Set up a gentle melt. In a medium, heavy-bottomed saucepan, combine the sweetened condensed milk and butter. Warm over low heat, stirring, until the butter melts and the mixture is smooth but not simmering.

Add white chocolate. Stir in the white chocolate chips. Keep the heat low and stir constantly until fully melted and silky. If pieces resist melting, remove the pan from heat and keep stirring—the residual heat will finish the job.

Flavor the base. Stir in coconut extract, vanilla extract, and fine sea salt. Taste carefully (it’s hot) and adjust the coconut extract to your liking. A little goes a long way.

Fold in coconut. Add the toasted coconut and fold gently to distribute evenly.

Spread and top. Pour the mixture into the lined pan and smooth the surface with an offset spatula. Sprinkle the remaining 1/2 cup shredded coconut evenly over the top. Press lightly so it adheres. Add a pinch of flaky sea salt if you like a sweet-salty finish.

Chill to set. Refrigerate uncovered for 2–3 hours, or until firm enough to slice cleanly. For the neatest edges, chill overnight.

Cut and serve. Use the parchment overhang to lift the slab onto a cutting board. Warm a sharp knife under hot water, dry it, and cut into 1-inch squares, wiping the blade between cuts for tidy pieces.